Mendocino Farms Sells Majority Stake to Growth Firm
Fast casual Mendocino Farms, a Southern California-based brand with 16 locations, has sold a majority stake to TPG Growth, the middle market and growth equity platform of alternative asset firm TPG.
TPG Growth acquired its stake from L Catterton. Co-founders Mario Del Pero and Ellen Chen, who debuted Mendocino Farms in 2005, will remain the largest individual shareholders. In addition, Harald Herrmann, the former president of Darden’s $1.5 billion Specialty Restaurant Group, will take over as CEO. The Specialty Restaurant Group included The Capital Grille, Seasons 52, Eddie V’s, and Bahama Breeze. Herrmann is also the co-founder of Darden concept The Yard House, and helped expand the 68-unit brand across the country. He was named its president and CEO in 2007.
“I’m thrilled to be joining Mario, Ellen, and the Mendocino Farms team,” Herrmann said in a statement. “They have built a great business and culture thus far, and we look forward to introducing more Californians and consumers across the country to Mendocino Farms.”
Currently, Mendocino Farms operates in Los Angeles, Orange County, and San Diego. TPG said it plans to expand the brand to markets outside of California. Given the brand’s dedication to local sourcing—each unit partners with local farmers and food artisans—the process should be a deliberate one.
“Mario and I have been looking for the right partners to help achieve our mission of growing Mendo, while staying true to the brand’s culture and values. We are thrilled to have Harald and TPG Growth as our new partners,” Chen said in a statement.
Mendocino Farms, a member of QSR’s 40/40 List, is a concept that breaks the traditional fast casual mold. It’s a sandwich concept that generates 40 percent of its business during the dinner daypart and seeks 3,000-square-foot spaces to fill. It also posts average unit volumes north of $3 million. The concept hires different designers for each new location and styles them to the neighborhood.
“Mendocino Farms is revolutionizing the restaurant industry with chef-driven food made from the best ingredients, served by passionate people, in an inviting neighborhood gathering place,” Del Pero said in a statement. “TPG Growth is the ideal partner to help Mendocino accelerate our next stage of growth while staying true to our values. Ellen and I also couldn’t be more excited to have Harald as our CEO; his soulfulness and mindfulness are legendary and a perfect fit for our team.”
TPG Growth invested in Philz Coffee in September 2016 and has invested in consumer brands Airbnb, Spotify, Beautycounter, Gelson’s Markets, and e.l.f. Cosmentics.
“As we look at investing in the restaurant space, we’ve seen that consumers are not only looking for higher-quality but also uniqueness—more distinctive flavors and more elevated experiences,” said Sanjay Banker, partner at TPG Growth, in a statement. “Mendocino Farms has a creative culinary approach and a community-centric spirit that makes it an exciting restaurant concept with significant growth potential. We look forward to working with Mario, Ellen, and Harald to continue building the business.”
Late in 2015, Mendocino Farms secured an investment from premium grocer Whole Foods Market, which included an opportunity for the brand to open in select Whole Foods locations.